You are on page 1of 21

AN OVERVIEW OF COLLECTIVE

INVESTMENT VEHICLES UNDER THE


NIGERIAN INVESTMENT LAWS

Lolade Ososami

Abraham & Co.

Lolade Ososami

Governing Laws & Regulation

The Investments and Securities Act, 1999

Establishes the Securities and Exchange


Commission (SEC), which is the regulatory
authority in charge of portfolio investment in
Nigeria.

SEC Rules
Nigerian Stock Exchange Rules &
Regulations
Companies and Allied Matters Act, 1990

'LOLADE OSOSAMI

COLLECTIVE INVESTMENT

An arrangement under which


participants pool their contributions
for the purpose of sharing the profits
or income arising from the
management of their money or
property solely from the efforts of a
third party. (S. 123(2) ISA)

'LOLADE OSOSAMI

Collective Investment Vehicles


Recognized Under the ISA

Investment Company
Unit Trust
Investment Trust
Venture Capital Company
Real Estate Investment Coy.
Trust for Sale
Pension Fund
Provident Fund
'LOLADE OSOSAMI

Investment Company

Must be registered under the CAMA


as a private Nigerian company.
Membership must not exceed 50
SEC registration is not required.
Shares held by members represent a
proportionate interest in the ICs
portfolio of securities

'LOLADE OSOSAMI

investment company

Securities purchased are determined


by the ICs investment objective.
Investors can participate in the
income and assets of the IC at
winding up.
Fund Manager employed or engaged
by the Company must be registered
with SEC.
'LOLADE OSOSAMI

Unit Trust

Must be registered under CAMA


Owns and manages a diversified
portfolio and issues units linked to the
value of the portfolio.
Its units are redeemable at net-asset
value
Its units must be listed on the Stock
Exchange
'LOLADE OSOSAMI

unit trust

Can only invest in securities


prescribed by the Trustees
Investment Act or approved by SEC
Assets are vested in the Trustees
Its prospectus must be in the format
prescribed by SEC Rules and
Schedule 3 of the ISA.

'LOLADE OSOSAMI

Investment Trust

Must be registered under CAMA as a


PLC.
Its shares must be listed on the Stock
Exchange.
Its prospectus must be in the
prescribed format.
It sells its shares like any public
company.
'LOLADE OSOSAMI

investment trust

Its shares are irredeemable


Investors can only sell their shares in
the stock market at a price
determined by demand and supply
Investors must pay a brokerage
commission at the time of sale and
purchase

'LOLADE OSOSAMI

10

Venture Capital Fund/Coy.

Company must be certified by the


FIRS as a VCC

Investment must be in a certified


Venture Project

The project must fulfill the objectives


set out in Decree 89 of 1993
'LOLADE OSOSAMI

11

venture capital company

Provisions of the Trustees Investment


Act will apply

Company must register with SEC

Trustees of other investment schemes


can invest in the Company and their
investment will be deemed as
security
'LOLADE OSOSAMI

12

Real Estate Investment Coy.

Usually takes the form of a registered


company set up solely to acquire
intermediate or long-term interests in
real estate or property development.
Investors must be shareholders in the
company so that they can exercise
voting rights in the management of the
company.
'LOLADE OSOSAMI

13

real estate investment coy

The company can raise funds from the


Capital Market through the issuance of
securities which must be in form of
income certificates that give
investors the right to a share of the
income from any property acquired by
the company or property development
project undertaken by the company.

'LOLADE OSOSAMI

14

Real Estate Trust (also known


as Trust for Sale)

A Trust constituted for the sole purpose


of acquiring a property on a Trust for
Sale for investors.
Investor shall be entitled to retain
control over their instruments by
investing directly in a particular
property rather than in a portfolio of
investments.
'LOLADE OSOSAMI

15

trust for sale

Investors shall acquire units in the


Trust through which they shall be
entitled to receive periodic distribution
of income and participate in any capital
appreciation of the property
concerned.

'LOLADE OSOSAMI

16

Pension Funds

Any society, fund or scheme, the


assets of which are held under
irrevocable trusts and the main
objects of which are the provision of
non-assignable and non-commutable
retirement pensions or annuities for
an individual or his dependants after
his death.
'LOLADE OSOSAMI

17

Pension Funds contd.

Its main purpose shall be the


provision of pensions for employees
on retiring at a specified age; or the
accumulation of sums payable to an
employee on leaving the service of an
employer.
The Fund must be constituted under
an independent and irrevocable trust.
'LOLADE OSOSAMI

18

pension fund

Membership must be open to all


employees
At least 50% of funds must be
invested in Securities issued by or
under the authority of any
government in Nigeria and other
Capital Market Instruments.

'LOLADE OSOSAMI

19

Provident Fund

Any society, fund or scheme, not


being a pension fund, established
under irrevocable trusts or a law in
Nigeria or elsewhere the objects of
which are the provision of
commutable retirement benefits for
an individual or his dependants after
his death or a group of individuals
and their dependants.
'LOLADE OSOSAMI

20

Provident funds contd.

The retirement benefits are


commutable (i.e they can be altered)

The total contribution made by the


employer is limited to 25% of the
employees annual salary.

'LOLADE OSOSAMI

21